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A 10% Yield, 23 Straight Hikes, 10% Distribution Growth Through 2019

Published Sat, 10 Nov 2018 09:15:00 -0500 on Seeking Alpha

If you're looking for steady earnings and distribution growth, maybe you should consider Delek Logistics Partners LP (DKL), the yieldco arm of Delek US (DK). DKL has had a steady stream of dropdown assets from DK over the past several quarters, which have ramped up its earnings big time:
Management raised the Q3 '18 payout by $.02, to $.79, its 23rd straight distribution hike:
(Source: DKL site)
Profile:
DKL's logistics assets exist mainly to serve DK's petroleum refining assets and transportation services. In this type of arrangement, the parent/sponsor sells/drops down assets to the yieldco LP, which in turn funds these acquisitions via a combination of equity and debt. The yieldco usually has an attractive distribution yield in order to garner support for its publicly traded units. DKL and DK both share the same management, and DK owns 94.6% of the GP interest and a 61.5% interest in the LP's common units.
DK has a strong refining presence in the Permian basin, after buying ALON USA in 2017:
(Source: DKL site)
According to the US Energy Information Administration, the Permian Basin had growth of 53K barrels of oil/day in October '18:
Rig counts in the Permian have made a major rise, since bottoming out in 2016, while new well oil production/rig has bounced around, roughly between 500 to 600 barrels/day over the past year:
(Source: EIA site)
DKL's management echoed the upbeat data on these charts, on the... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
ANDEAVOR LOGISTICS LP 32.17   12.5 2.57 4.12 12.01
HOLLY ENERGY PARTNERS LP 26.40   14.7 1.80 2.69 9.93
MPLX LP 28.61   12.4 2.30 2.67 9.28
NUSTAR ENERGY 26.89   0.0 -6.61 2.40 8.95
PLAINS ALL AM. PIPELINE 21.20   5.3 3.99 1.44 6.75
MAGELLAN MIDSTREAM PARTNERS 65.61   11.0 5.99 4.05 6.20
ENTERPRISE PRODUCTS 28.68   12.4 2.31 1.76 6.13
DELEK US 36.53   5.7 6.41 1.16 3.17

ANDEAVOR LOGISTICS LP - ANDX
ANDEAVOR LOGISTICS LP - ANDX  


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